By David Harrison 

LIMA, Peru--A top Chinese official sought Wednesday to allay fears of a deep economic slowdown in China, saying continued growth would stabilize the country's currency and allow the central bank to let it move according to market forces.

A hands-off approach could cause more depreciation in the yuan, also known as the renminbi, should the Chinese economy weaken further. But Yi Gang, the People's Bank of China's deputy governor, said such "fundamentals" as China's strong trade surplus would ensure the yuan's strength. Chinese officials have said they have allowed the yuan to slide to hitch the currency to the global market and not to boost exports and help the economy.

"I think the overall direction for the renminbi exchange rate regime will continue to move toward a more market-oriented regime and let basically the demand and the supply determine the rate," Mr. Yi said at the International Monetary Fund's annual meeting here.

China's still-healthy growth rate "suggests that the renminbi will be more or less stable at a rate more or less close to its equilibrium level," he said.

In August, the Chinese central bank let the yuan fall against the dollar but later intervened to prop up the currency. Mr. Yi said that intervention didn't represent a change of heart on the part of the PBOC but rather an attempt to stamp out market volatility.

"At this critical moment, stabilization is very important so we did something to stabilize the market and I think so far the market has been stabilized," he said.

The IMF has welcomed China's looser exchange-rate policy but said its central bank's intentions weren't properly communicated at the time. The rollout led many investors to think the yuan devaluation was a sign of concern about the state of the Chinese economy.

"What happened in August is that the timing was complicated, given the previous uncertainties that had been unleashed by the very significant correction that took place in equity markets, and the increasing concerns and uncertainty about the future path of growth in China," said José Viñals, director of the IMF's monetary and capital markets department.

The move "was perhaps misinterpreted by markets" as an attempt to jump-start growth, he added.

"I don't think that was the intention," Mr. Viñals said. "The intention was a more market-based, floating exchange-rate system."

Mr. Yi also said China would welcome the Trans-Pacific Partnership, a 12-nation trade pact completed this week between Pacific countries including the U.S. and Peru, but excluding China.

"We have an open mind to the TPP," he said. "We are ready to cooperate with 12 countries and to consider TPP."

But Mr. Yi added that the world would also need more "regional, multilateral, as well as global, trade agreements."

Ian Talley contributed to this article.

Write to David Harrison at david.harrison@wsj.com

(END) Dow Jones Newswires

October 07, 2015 16:53 ET (20:53 GMT)